China is one of the best economies for foreign investment today, and as an entrepreneur, you should consider it when deciding to grow your brand offshore. Notably, the country’s rapidly changing demographics, increasingly open business environment, and more consumer spending make it an excellent platform that you can use to catapult your enterprise into an international brand.
Even with the lovely business environment, we must indicate that challenges abound and you can only be sure of growth by understanding them well when registering a company in China. This post will take a closer look at some of these challenges and provide suggestion to overcome them.
Identifying the Best Market
With its high population of more than 1.3-billion people and a large landmass that exceeds that of the US, China can be pretty difficult to identify a good market for your business. If your business targets importing or making goods for the local market, identifying potential opportunities can be an uphill task. This challenge has been complicated by the Chinese administration’s focus on encouraging investors to set up their businesses away from the coastal cities.
To address this challenge, it is important to appreciate that China is not a single homogenous market. For example, there are huge differences between various provinces based on their consumer spending habits, per capita GDP, education levels, and income levels, among others. Therefore, it is important to invest in market research and pinpoint the right niche to target.
You might also want to bring onboard a marketing professional with experience in the Chinese market. A good professional who has successfully helped other investors during company registration in China might come in handy to assist you in identifying the right market and strategies.
The Chinese Policies and Regulations
Another challenge that you will encounter after incorporating your company in China is local policies and regulations. Although China’s trade environment has improved significantly since its entry to the WTO in 2001, a lot of industries are still regulated. For example, foreign companies are discouraged from fields such as energy and telecommunication niches.
To be able to access these lucrative niches, one of the recommended methods is selecting the right business formations, such as a joint venture with local Chinese. Although a joint venture implies that you have to work with the local partner, it will be easy to access the restricted niches. If you prefer to use a wholly foreign-owned enterprise (WFOE), you might have to target only the encouraged areas.
Note that because the Chinese policies and regulations can change regularly, it is also important to review them from time to time to avoid penalties.
Stiff Competition in the Chinese Market
Just like you have identified China as a high-potential market, it is important to appreciate that a lot of investors are also headed there. After registering a business in China, local brands will also be fighting for a market share, and you will need to answer the main question, “How do I outdo the competition?” Well, there are several ways to achieve this:
- Study your competitors to understand their strategies and device ways of outdoing them.
- Adopt an integrated marketing method to reach a bigger market share and build a positive brand.
- Put a lot of effort into product development to ensure you create high-quality products in line with what your targeted market wants.
If you have decided to open a company in China, it is paramount to understand that there are numerous challenges, such as the ones we have listed in this post. Therefore, it is crucial to work on the best way to overcome them. Particularly, you need to bring on board a professional to help you understand the market, interpret the policies, craft good strategies, and hold your hand to success.